Jessen v. Keystone Savings & Loan Assn.

• Decision Date: 27 April 1983
• Citation: 142 Cal.App.3d 454,191 Cal.Rptr. 104
• Court: California Court of Appeals Court of Appeals
• Parties: Ray A. JESSEN, et al., Plaintiffs and Appellants, v. KEYSTONE SAVINGS AND LOAN ASSOCIATION, et al., Defendants and Respondents. Civ. 26172.

Page 104

191 Cal.Rptr. 104

142 Cal.App.3d 454

Ray A. JESSEN, et al., Plaintiffs and Appellants, v. KEYSTONE SAVINGS AND LOAN ASSOCIATION, et al., Defendants and Respondents.

Civ. 26172.

Court of Appeal, Fourth District, Division 1, California.

April 27, 1983.

Hearing Denied July 13, 1983.

Shenas, Robbins, Shenas & Shaw, Peter Shenas and Dennis W. Fliehman, San Diego, for appellants.

McKenna, Conner & Cuneo, Aaron M. Peck, I. Bruce Speiser, C. Steven McMurry and Dean J. Zipser, Los Angeles, for respondents.

WORK, Associate Justice.

Ray Jessen and others appeal a denial of their request for a preliminary injunction to halt a non-judicial foreclosure sale of their various interests in several condominium units. We affirm.

Factual and Procedural Background

Jessen-Norwich ¹ borrowed money from Keystone Savings & Loan Association to finance construction of condominium units it intended to sell. The project has been completed and most units have been sold. The property secures deeds of trust held by the lender. Keystone seeks to foreclose under powers of sale in its 1977 and 1979 construction loan deeds of trust ² and two 1980 individual purchase money trust deeds, one securing a purchase money loan on unit No. 4 made by Ray and Rebecca Jessen and the other securing a loan on unit No. 2 made by the Jessens and the other plaintiffs jointly.

Keystone seeks only money and it appears the sale of the real property would substantially satisfy its demands. It also appears any recovery to which it is entitled can be satisfied from a bond which plaintiffs offer to post to obtain a preliminary injunction restraining foreclosure pending disposition of the underlying law suit in which plaintiffs claim substantial damages and offsets exceeding Keystone's claims.

The trial court, after hearing, denied the preliminary injunction because it believed plaintiffs had only a marketing interest in the respective condominiums. The court equated all four condominium units with other fungible goods and was satisfied the plaintiffs' only interest was monetary, an interest for which they could be adequately compensated in money damages should they prevail in the law suit. (Solvency of Keystone is not at issue.) We stayed foreclosure pending appeal.

Discussion

The grounds justifying equitable relief by way of injunction are stated in Code of Civil Procedure section 526. ³ Subdivision (2) authorizes relief upon a showing of great or irreparable injury to a party, and subdivision (4) authorizes it when pecuniary compensation will not give adequate relief.

These subdivisions tend to factually overlap. It would appear an irreparable injury is one for which either (1) its pecuniary value is not susceptible to monetary valuation, or (2) the item is so unique its loss deprives the possessor of intrinsic values not replacable by money or in kind. Neither factor is shown to exist here.

The Marketed Units

Here, unit Nos. 8 and 15 had been pricetagged and were being openly marketed. The trial court correctly determined they had no unique relationship to Ray Jessen other than their market price. On the other hand, the Jessens and the other plaintiffs purchased unit Nos. 2 and 4 for their individual investment purposes. There is no contention those investment plans were short term rather than long term, that any sale price had yet been established or decision made to market them.

Plaintiffs claim an injunction is required simply because it is real property upon which foreclosure is sought, and the uniqueness of real property prevents its taking ever being adequately compensated by money. ⁴ They cite Civil Code section 3387: "It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary

                compensation."   This presumption, and most cases cited, pertain to specific enforcing contracts for conveyance of real property.  Although those cases apply the Civil Code presumption to both commercial and non-commercial real property and find no difference between a buyer's desire to reside upon or to use the property for investment purposes, they are inapposite here where unit Nos. 8 and 15 have an established sales price and are being openly marketed.  Their maximum value to Ray Jessen is precisely his current sales price.  The trial court correctly determined the loss of unit Nos. 8 and 15 may be adequately compensated in damages and will create no great or irreparable harm
                

THE UNITS HELD FOR INVESTMENT

However, unit Nos. 2 and 4 are held for undefined investment purposes, a "use" potentially including the owners personal occupancy, renting until an appropriate market climate, or for other purposes within their total investment plan. In this sense, the issue regarding unit Nos. 2 and 4 is no different than that considered in Stockton v. Newman, 148 Cal.App.2d 558, 307 P.2d 56, a decision affirming the trial court's enjoining foreclosure of a trust deed securing a loan against an apartment house. There the "use" was commercial and the foreclosing parties were solvent. However, the reviewing court held the possibility plaintiffs might recover damages against the lenders which, in the absence of foreclosure, would leave them with money damages plus use of the property, justified the injunction. The court stressed the inadequacy of the legal remedy because of the unique nature of the real property. It treated the foreclosure as "tending to render the [potential] judgment ineffectual ...." (§ 526, subd. (3).) For the same reason, it would not have been an abuse of discretion to have granted an injunction as to unit Nos. 2 and 4. However, we are faced with the question of whether it was an abuse of discretion not to do so.

Granting or denying an injunction is within the sound discretion of the trial court and will be upheld on appeal absent an abuse of discretion. Discretion is abused when a court exceeds the bounds of reason or contravenes uncontradicted evidence. (Continental Baking Co. v. Katz, 68 Cal.2d 512, 527, 67 Cal.Rptr. 761, 439 P.2d 889.) The trial court determines whether greater injury will result to defendant from granting the injunction than to plaintiff from refusing it and, in making that determination, evaluates the probability of plaintiffs' ultimately prevailing. In the absence of a reasonable probability of success, the court should deny the preliminary injunction. "In the last analysis the trial court must determine which party is the more likely to be injured by the exercise of its discretion [citation] and it must then be exercised in favor of that party [citation]." (Family Record Plan, Inc. v. Mitchell, 172 Cal.App.2d 235, 242, 342 P.2d 10.)

Here, the court's inquiry was directed only to its determination the condominium units were being marketed as commodities "like an inventory," lumping all four units into that category. It stated its doubts regarding the plaintiffs' chances of success in the following terms: "I do not believe that I'm satisfied that the final outcome of this case would be a permanent injunction against foreclosure." It stated, "[b]ut my sense is that in the final analysis the difference between the parties will indeed be money and that mortgages, trust deeds, are the lifeblood of the real estate industry and the investment industry ... and if you can't depend upon the fact that you can foreclose under the thing when it is defaulted, because every time somebody raises any question, legitimate or illegitimate, regarding any part of the transaction, the whole thing would be tied up in litigation for years, nobody's going to be able to borrow money, and nobodys going to be able to build anything." He concluded by saying: "I just didn't believe that the kind of showing here on both sides is such as to suggest that a fair, equitable, and just result is more likely to be achieved if I stop these sales than if I let them go, and so therefore the preliminary injunction is denied." Contrary to plaintiffs' claim the trial court did not weigh the potential success of their actions, the trial court received voluminous points and authorities and supporting declarations arguing the merits, and showed its familiarity with those documents by its remarks during the hearing.

Plaintiffs concede the court may deny a preliminary injunction either (1) on its finding irreparable injury will not result to the party seeking the injunction, or (2) that the party has failed to demonstrate a reasonable probability of success on the merits. (People v. Pacific Land Research Co., 20 Cal.3d 10, 21, 141 Cal.Rptr. 20, 569 P.2d 125; Forde v. Bank of Finance, 136 Cal.App.3d 38, 42, 186 Cal.Rptr. 272...